Writer Russell Bakes once said, “Ah, summer, what power you have to make us suffer and like it.” While Mr Bakes was speaking about the season, the same may be broadly applicable to most asset classes that the retail investor can look at in the next six months, i.e. till next summer.
And like the saying of Mr Baker, while it may be a rough ride, overall it seems to be blue skies at the end of the period.
“Though next summer is a short period of time, if global GDP grows as it has done in the US and given that the RBI governor has already indicated that Indian GDP might surprise on the upside, we think increased economic activity could certainly bring positive bias to the (equity) market,” says Abhishek Banerjee, Founder and CEO, LouusDew Wealth and Investment Managers.
“With the US Fed pausing the increase in interest rates twice now in two consecutive meetings (US 10 years bond yield dropping by almost 10% in a span of a few days), it may be safe to assume that we are almost at the peak of the current rate hike cycle and going forward, any drop in the interest rates will fuel the markets,” says Col Rakesh Goyal (retd) a Certified Financial Planner.
“As far as debt goes, those with shorter-term goals may consider adding some duration to their debt fund portfolios, as we seem to be at or near terminal rates for this current cycle and any rate cuts in the medium-term future may result in capital gains,” says Harsh Gahlaut, CEO, FinEdge.
However, with the tax arbitrage being done away with vis-à-vis FDs, investors now need to take a deep think on whether it makes sense to go for an incremental 1-2% additional yield. This option would probably make more sense to Ultra HNIs with large portfolios, for whom even a minute return differential would amount to a large rupee value differential. “For most other investors, FDs are the way to go for shorter-term goals,” says Gahlaut.
“In terms of other asset classes, gold can certainly be looked at, ideally in the ETF (exchange traded fund) format and not as physical gold,” says Gahlaut.
With many countries coming out against the current dollar denominated trade, going forward, and a push from many countries to position trade in local currencies (including India), this is leading to people seeking cover in safe havens like gold in case the dollar domination comes under threat in the future.
Another cause of concern is the rapid increase in conflicts and arms across the world. This rapid increase in arming is also pointing towards a possibility of conflict in the future.
Of late, some countries have also been adding a considerable amount of gold to their treasuries (like China & India). “All this put together is contributing to an increase in demand for gold and this could continue to support gold prices in the immediate future,” says Gahlaut.
Manik Kumar Malakar is a personal finance writer.
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Updated: 28 Nov 2023, 10:22 AM IST